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                           IBIS TECHNOLOGY CORPORATION
                              32 CHERRY HILL DRIVE
                                DANVERS, MA 01923


                                                   October 23, 1997

Martin J. Reid
7 Wainwright Road
Unit 59
Winchester, MA  01890

Dear Mr. Reid:

     This letter is to confirm our understanding with respect to (i) your future
employment by Ibis Technology Corporation, a Massachusetts corporation (the
"Company"), (ii) your agreement not to compete with the Company and (iii) your
agreement to protect and preserve information and property which is confidential
and proprietary to the Company, subject to your agreement with the terms hereof
as indicated by your execution of this letter on the final page (the terms and
conditions agreed to in this letter shall hereinafter be referred to as the
"Agreement"). In consideration of the mutual promises and covenants contained in
this Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, we have agreed as follows:

     1. EMPLOYMENT. The Company will employ you, and you agree to work for the
Company, as its President and Chief Executive Officer, to have such
responsibilities, duties and authority as are customary to such position,
including, without limitation, general supervision and responsibility for the
general management and operation of the Company and its subsidiaries, if any.
You will also have such other responsibilities, duties and authority as may from
time to time be assigned to you by the Board of Directors of the Company (the
"Board") that are consistent with such position. You will also, if so elected,
serve as an officer or director of the Company or any subsidiary or affiliate of
the Company. You agree to devote your full business time and energies to the
business and affairs of the Company and its subsidiaries, if any; however,
nothing contained in this Section 1 shall be deemed to prevent or limit your
right to: (a) make passive investments in the securities of any publicly-owned
corporation, or (b) make any other passive investments with respect to which you
are not obligated or required to, and which you do not in fact, devote any
substantial efforts which interfere with your fulfillment of your duties
hereunder.

     2. TERM OF EMPLOYMENT. (a) Your employment pursuant to the terms of this
Agreement shall commence on or before December 1, 1997 and will continue until
November 30, 2000; provided, however, that notwithstanding the foregoing your
employment hereunder shall be terminated by the first to occur of the following:

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          (i)  Immediately upon your death;

          (ii) Upon notice from the Company following your inability, due to
     illness, accident or any other physical or mental incapacity, to perform
     the services provided for hereunder for an aggregate of 180 business days
     within any one year period during the term hereof, as determined pursuant
     to Section 8 herein;

          (iii) By the Company upon notice, for Cause, as defined herein, and as
     set forth below;

          (iv) By the Company, upon notice subject to Section 3 hereof, without
     Cause; or

          (v) By you, upon notice to the Company, PROVIDED, that if you do not
     give at least 60 days prior written notice of your intention to terminate
     your employment hereunder, you will forfeit all unused vacation, prepaid
     benefits, any unpaid incentive compensation, and any stock options which
     have not vested as of the date such notice is given.

     The right of the Company to terminate your employment hereunder to which
you hereby agree, shall be exercisable by written notice sent to you by the
Company and shall be effective as of the date of such notice.

     (b) The Company may, by majority vote of the Board or its Compensation
Committee, immediately and unilaterally, terminate your employment hereunder for
Cause at any time upon ten (10) days' advance written notice to you. Termination
of your employment by the Company shall constitute a termination for Cause if
such termination is for one or more of the following reasons: (i) your
continuing failure to render services to the Company in accordance with your
assigned duties consistent with Section 1 of this Agreement and such failure of
performance continues for a period of more than 120 days after notice thereof
has been provided to you by the Board or its Compensation Committee; (ii) your
willful misconduct or gross negligence; (iii) you are convicted of a felony,
either in connection with the performance of your obligations to the Company or
which conviction materially adversely affects your ability to perform such
obligations, or materially adversely affects the business activities,
reputation, good will or image of the Company; (iv) willful disloyalty,
deliberate dishonesty, breach of fiduciary duty or breach of the terms of this
Agreement; (v) the commission by you of an act of fraud, embezzlement or
deliberate disregard of the rules or policies of the Company which results in
significant loss, damage or injury to the Company; (vi) your willful
unauthorized disclosure of any trade secret or confidential information of the
Company; or (vii) your willful commission of an act which constitutes unfair
competition with the Company or which induces any employee or customer of the
Company to break a contract with the Company.

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     In making any determination under this Section 2(b), the Board or its
Compensation Committee shall act fairly and in utmost good faith and shall give
you an opportunity to appear and be heard at a meeting of the Board or any
committee thereof and present evidence on your behalf. For purposes of this
Section, no act, or failure to act, on your part shall be considered "willful"
unless done, or admitted to be done, by you in bad faith and without reasonable
belief that such action or omission was in the best interest of the Company.

     3. COMPENSATION. (a) In consideration for your services under this
Agreement, you shall be paid at the annual rate of One Hundred Seventy-five
Thousand Dollars ($175,000.00) subject to increase from time to time by action
of the Board in accordance with your performance and the Company's performance
("Base Salary"), and payable at such intervals as may be agreed upon by the
Company and you, less any amounts required to be withheld under applicable law.
Such compensation will be reduced by any disability payments which you receive,
after taking into account the tax benefits (if any) of such payments.

     (b) In the event your employment shall be terminated by the Company without
Cause, the Company shall continue to pay you your Base Salary then in effect and
the cost of your health insurance for a period of one year following any such
termination. All payments made under this section 3(b) shall be made at the
times and at the rate specified in section 3(a) hereof.

     (c) In the event your employment shall be terminated by the Company for
Cause, no further compensation or benefits of any kind shall be payable to you
hereunder (except for any health insurance benefits required by applicable law).

     4. BONUSES. You will be entitled to such bonuses as are determined from
time to time by the Board or its Compensation Committee in its discretion,
taking into account, among other factors, your performance and the Company's
performance. It is anticipated that if your performance and the Company's
performance satisfy certain predetermined goals that are reasonable and mutually
agreed upon by you and the Board or its Compensation Committee at the
commencement of each one year period hereunder, that the amount of the annual
bonus will equal up to thirty percent (30%) of your Base Salary.

     5. STOCK OPTIONS. Upon the commencement of your employment with the
Company, the Company will grant you a stock option or options to purchase an
aggregate of 140,000 shares of the common stock, $.008 par value, of the
Company, with an exercise price per share equal to the fair market value of the
Common Stock on the date of grant and subject to the terms and conditions set
forth in the Company's standard stock option agreement (the "Option Agreement").
The Option Agreement shall provide that one quarter of such options shall be
vested upon the commencement of your employment with the Company, with an
additional one quarter to vest on each annual anniversary of the commencement of
your employment.

     6. EXPENSES. The Company will reimburse you for travel, entertainment and
other business expenses reasonably incurred by you in connection with the
business of the Company to

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 the extent and in a manner consistent with then
Company policy and appropriate to someone in a position of your stature.

     7. BENEFITS. In connection with your employment hereunder, you will be
entitled during your employment to the following additional benefits:

     (a) At the Company's expense, such fringe benefits as the Company may
provide from time to time for its senior management.

     (b) You shall be entitled to no less than the number of vacation days in
each calendar year determined in accordance with the Company's vacation policy
as in effect from time to time, but not less than four (4) weeks in any calendar
year (prorated in any calendar year during which you are employed hereunder for
less than the entire such year in accordance with the number of days in such
calendar year in which you are so employed). You shall also be entitled to all
paid holidays and personal days given by the Company to its executives.

     (c) The Company shall furnish you with office space, stenographic
assistance and such other facilities and services as shall be suitable to and
appropriate for your position and for the performance of your duties as set
forth herein.

     (d) In addition to the foregoing, you shall also be entitled to participate
in any employee benefit plans which the Company provides or may establish for
the benefit of its executive employees generally.

     8. TERMINATION UPON DEATH OR DISABILITY. Your employment by the Company
shall terminate upon your death, or if, by virtue of total and permanent
disability, you are unable to perform your duties hereunder.

     The determination that, by virtue of total and permanent disability, you
are unable to perform your duties hereunder shall be made by a physician chosen
by the Company and reasonably satisfactory to you (or your legal
representative). The cost of such examination shall be borne by the Company.
Without limiting the generality of the foregoing, you shall be conclusively
presumed to be totally and permanently disabled hereunder if for reasons
involving mental or physical illness or physical injury you fail to perform your
duties hereunder for a period aggregating one hundred eighty (180) days or more
in any twelve (12) consecutive month period.

     For purposes of this Section 8, the termination date in the event of death
shall be the date of death and in the event of such total and permanent
disability shall be the earlier of the date of such physician's examination
pursuant to which such determination is made or the first business day after
which such 180 days has expired.

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     In the event of such a termination of employment as a result of your death
or total and permanent disability, the Company shall have no further obligations
hereunder except as provided in Section 9 hereof and except as provided below in
this Section 8:

     (a) In the event of death, the Company shall pay to your estate amounts, at
the annual Base Salary rate in effect on the termination date, in monthly
payments, for a period of twelve (12) months following the termination date (or,
in lieu of the obligation to make such payments, or in partial satisfaction of
the obligation to make such payments, the Company may provide you with one or
more life insurance policies, in which event the death benefit payable
thereunder shall reduce, on a dollar-for-dollar basis, the amount of the
payments which the Company would otherwise be obligated to make under this
Section 8(a)); and

     (b) In the event of total and permanent disability, the Company shall pay
to you (or your estate) amounts, at the annual Base Salary rate in effect on the
termination date, payable in monthly payments, for a period of twelve (12)
months following the termination date. Amounts to which you would otherwise be
entitled under this subparagraph (b) shall be reduced by the amount of any
disability insurance proceeds actually paid to you or paid for your benefit (or
to your estate or legal representatives) with respect to such twelve (12) months
following the termination date under any disability policy provided by the
Company, after taking into account the tax benefits (if any) of such payments.

     9. ACCRUED COMPENSATION. In the event of any termination of your employment
for any reason, you (or your estate) shall be paid such portion of your Base
Salary and bonuses as has accrued by virtue of your employment during the period
prior to termination and has not yet been paid, together with any amounts for
expense reimbursement and similar items which have been properly incurred in
accordance with the provisions hereof prior to termination and have not yet been
paid. Such amounts shall be paid within ten (10) days of the termination date.
The amount due to you (or your estate) under this Section 9 in payment of any
bonus shall be a proportionate amount of the bonus, if any, that had been
determined by the Board pursuant to Section 4 and would otherwise have been due
to you as if such termination had not occurred.

     10. PROHIBITED COMPETITION. You agree and covenant that, with respect to
the business of the Company, until your termination of employment, whether or
not such termination is voluntary or involuntary, and for a period of one (1)
year following such termination, you shall not, without the prior written
consent of the Company, for yourself or on behalf of any other, directly or
indirectly, either as principal, agent, stockholder, employee, consultant,
representative or in any other capacity, own, manage, operate or control, or be
concerned, connected or employed by, or otherwise associate in any manner with,
engage in or have a financial interest in any business which is directly or
indirectly competitive with the business of the Company, including, without
limiting the generality of the foregoing, any business engaged in manufacturing,
marketing or sale of SIMOX wafers or the design and development of associated
manufacturing equipment and processing techniques; PROVIDED, HOWEVER, that
nothing contained herein shall preclude you from purchasing or owning stock in
any such business if

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such stock is publicly traded, and provided that your holdings do not exceed
three percent (3%) of the issued and outstanding capital stock of such business.
You further agree that during such time, you will not attempt to or hire, or
assist in the hiring of any director, officer or employee or agent of the
Company, or encourage any person to terminate his or her employment or business
relationship with the Company, encourage any customer or supplier of the Company
to terminate its relationship with the Company, or obtain or assist in
obtaining, for the benefit of any person or entity other than the Company or a
Subsidiary, any customer or supplier of the Company.

     11. PROTECTED INFORMATION. You shall not, without the prior written consent
of the Company, use, except in the course of performance of your duties for the
Company, disclose or give to others any fact or information which was disclosed
to or developed by you during the course of performing services for the Company,
and is not generally available to the public, unless if such information is so
generally available as a result of your fault, including but not limited to
information and facts concerning business plans, customers, prospects, client
lists, or any other scientific, technical, trade or business secret or
confidential or proprietary information of the Company.

     12. OWNERSHIP OF IDEAS, COPYRIGHTS AND PATENTS. You agree that all ideas,
discoveries, creations, manuscripts and properties, innovations, improvements,
know-how, inventions, developments, apparatus, techniques, methods, and formulae
(all of the foregoing being hereinafter referred to as "the inventions") which
may be used in the business of the Company, whether patentable, copyrightable or
not, which you may conceive or develop during your term of employment with the
Company, alone or in conjunction with another, or others, whether during or out
of regular business hours, and whether at the request, or upon the suggestion of
the Company, or otherwise, shall be the sole and exclusive property of the
Company, and that you shall not publish any of the inventions without the prior
consent of the Company. You hereby assign to the Company all of your right,
title and interest in and to all of the foregoing. You further represent and
agree that to the best of your knowledge and belief none of the inventions will
violate or infringe upon any right, patent, copyright, trademark or right of
privacy, or constitute libel or slander against or violate any other rights of
any person, firm or corporation, and that you will use your best efforts to
prevent any such violation.

     At any time during or after your term of employment with the Company, you
agree that you will fully cooperate with the Company, its attorneys and agents,
in the preparation and filing of all papers and other documents as may be
required to perfect the Company's rights in and to any of such inventions,
including, but not limited to, joining in any proceeding to obtain letters
patent, copyrights, trademarks or other legal rights of the United States and of
any and all other countries on such inventions, provided that the Company will
bear the expense of such proceedings, and that any patent or other legal right
so issued to you, personally, shall be assigned by you to the Company without
charge by you.

     13. DISCLOSURE TO FUTURE EMPLOYERS. You agree that you will provide, and
that the

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Company may similarly provide in its discretion, a copy of the covenants
contained in Sections 10, 11 and 12 of this Agreement to any business or
enterprise which you may directly, or indirectly, own, manage, operate, finance,
join, control or in which you participate in the ownership, management,
operation, financing, or control, or with which you may be connected as an
officer, director, employee, partner, principal, agent, representative,
consultant or otherwise.

     14. RECORDS. Upon termination of your relationship with the Company, you
shall deliver to the Company any property of the Company which may be in your
possession including products, materials, memoranda, notes, records, reports, or
other documents or photocopies of the same.

     15. NO CONFLICTING AGREEMENTS. You represent and warrant that you have no
commitments or obligations inconsistent with this Agreement and you agree to
indemnify and hold the Company harmless against loss, damage, liability or
expense arising from any claim based upon circumstances alleged to be
inconsistent with such representation and warranty.

     16. PARTIES. This Agreement is personal and shall in no way be subject to
assignment by you except as contemplated hereby. This Agreement shall be binding
upon and shall inure to the benefit of the Company and its successors and
assigns either by merger, operation of law, consolidation, assignment, purchase
or otherwise of a controlling interest in the business of the Company and shall
be binding upon and shall inure to the benefit of you, your heirs, executors,
administrators, personal and legal representatives, distributees, devisees,
legatees, successors and permitted assigns. If you should die while any amounts
would still be payable to you hereunder if you had continued to live (other than
amounts to which you would be entitled by reason of continued employment), all
such amounts, unless otherwise provided herein, shall be paid in accordance with
the terms of this Agreement to your devisees, legatees or other designees or, if
there be no such designee, to your estate. The Company agrees that a successor
in interest by merger, operation of law, consolidation, assignment, purchase or
otherwise of a controlling interest in the business of the Company will be
informed prior to such event of the existence of this Agreement. The Company
will require any successor (whether direct or indirect, by purchase, merger,
operation of law, consolidation, assignment or otherwise of a controlling
interest in the business, stock or other assets of the Company) to assume
expressly and agree to perform this Agreement. As used in this Agreement, "the
Company" shall mean the Company as hereinbefore defined and any successor as
aforesaid.

     17. INVALIDITY. We mutually intend this Agreement to be enforced as
written. However, if any term or provision of this Agreement shall to any extent
be declared illegal or unenforceable by a duly authorized court of competent
jurisdiction, then the remainder of this Agreement, or the application of such
term or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, each term and
provision of this Agreement shall be valid and be enforceable to the fullest
extent permitted by

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law and the illegal or unenforceable term or provision shall be deemed replaced
by a term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision.

     18. NOTICES. All notices and communications required or permitted to be
given hereunder shall be duly given by delivering the same in hand or by
depositing such notice or communication in the mail, sent by certified or
registered mail, return receipt requested, postage prepaid, or by delivery by
overnight courier, with a receipt obtained therefor, if to you, at the address
listed above or if to the Company: Ibis Technology Corporation, 32 Cherry Hill
Drive, Danvers, MA 01923, Attn: Board of Directors, or such other address as
either party furnishes to the other by like notice, provided, however, that any
notice of a change of address shall be effective only upon receipt.

     19. ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding between us in relation to the subject matter hereof and there are
no promises, representations, conditions, provisions or terms related thereto
other than those set forth or referred to in this Agreement and the exhibits
hereto. This Agreement supersedes all previous understandings, agreements and
representations between the Company and you regarding your employment by the
Company, whether written or oral.

     20. HEADINGS. All captions in this Agreement are intended solely for the
convenience of the parties, and none shall be deemed to affect the meaning or
construction of any provision hereof.

     21. WAIVER. No failure of the Company or you to exercise any power reserved
to it or you, respectively, by this Agreement, or to insist upon strict
compliance by you or the Company, respectively, with any obligation or condition
hereunder, and no custom or practice of the parties at variance with the terms
hereof, shall constitute a waiver of the Company's or your right, as the case
may be, to demand exact compliance with any of the terms hereof. Waiver by
either party of any particular default by the other party hereto shall not
affect or impair the waiving party's rights with respect to any subsequent
default of the same, similar or different nature, nor shall any delay,
forbearance or omission of either party to exercise any power or right arising
out of any breach or default by the other party of any of the terms, provisions
or covenants hereof, affect or impair our or your right to exercise the same,
nor shall such constitute a waiver by the Company or you, as the case may be, of
any right hereunder, or the right to declare any subsequent breach or default
and to terminate this Agreement prior to the expiration of its term.

     22. SUBSIDIARIES. As used herein, the term "Subsidiaries" shall mean all
entities a majority of the equity of which entitling the holder thereof to vote
is owned by the Company or a Subsidiary.

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     23. GOVERNING LAW. This Agreement shall be construed under and be governed
in all respects by the law of the Commonwealth of Massachusetts.

     24. AMENDMENT. No amendment or modification to this Agreement shall be
effective unless in writing and signed by both parties hereto.

     25. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each executed counterpart constituting an original and such
counterparts together constituting one agreement.

     If you agree with the terms of your employment as set forth in this
Agreement, please execute the duplicate copy hereof in the space provided below.

                              IBIS TECHNOLOGY CORPORATION


                              By: /s/ G. Ryding
                                 -------------------------------
                              Name: G. Ryding
                                   -----------------------------
                              Title: CEO and President
                                    ----------------------------


ACCEPTED AND AGREED
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as of October 23, 1997:



/s/ Martin J. Reid
------------------
Martin J. Reid





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